Time For A New Paradigm

Coupling automation with a short-term workforce could make current engineering management concerns obsolete

A handy principle we have used many times is that people do not change. Any time-proven management principle will continue to hold true because people will continue to act human (including to lie, cheat and steal). The late management guru and author Peter Drucker was a leading proponent of a similar notion by showing how new management situations had parallel events in the past, events from which we can learn.

He showed that the development of computers would make IT technicians important at the beginning, just like the introduction of the printing press, but writers and programmers would overshadow the technical experts once the new equipment became commonplace.

Drucker was greatly influenced by the approach of the Great Depression and the shattering of the promise of continued growth forever because (in the mid- 1920s) “this time things are different.” When things were shown to not be different, Drucker felt safe to promote the idea that things will never be different “this time.” The irrationality of people will continue to work against any well-thought-out fads that fail to recognize that people do not act how they “should.” This concept has also worked well for us.

However, there are many signs that things really are different this time. The metaphorical black swan may apply to Drucker’s principle of things not being different this time. Because things have had historical parallels up to now, they will always have parallels – until they do not. Drucker struggled to find a parallel for the massive urbanization now underway – turning so many formerly rural majority countries (e.g., Korea) into predominantly city-based cultures. Drucker had to go way back to the development of agriculture as his model for the mass migration to cities and admitted there is very little written record of what happened back then to use for guidance.

What is different?

Much of the material now taught in management schools was being formalized during the 1950s. Edwards Deming was developing his statistical control methods at this same time, but he didn’t become prominent as a management consultant in the United States until late in his life, during the 1980s. The important point is the work environment throughout this period. Up until about 2010, it was easy to find people who had been at their organizations at least 30 years. In the 1990s, many workplaces still had retirement parties for lifelong employees almost every month. Company newsletters routinely highlighted workers celebrating their 30- or 40-year work anniversaries.

Deming disapproved of the annual performance appraisal in part because determining the relative output between employees did not help the manager much. After all, managers are basically stuck with the workers they have, and there is little to gain from reminding them of their limitations. Deming stated that it was much more important to hire the desired people in the first place, because they would be there a very long time. He stressed investing effort at the time of selection and hiring. Then you allow workers the freedom to develop at their job.

But times are changing.

We have recently worked in the offices of major international corporations where it is difficult to get a hard copy of anything. Sales orders, delivery tracking and even timesheets are processed electronically. Official signatures are attached digitally. Subsequent to the initial failures to meet expectations, research has shown that modifications to the automated systems are providing clear paybacks. That is, once the major expenditure to automate has been committed to and implemented, it is better to go with the installed systems than to turn back.

Automated systems are here to stay, and the modern manager must reject the old notion that human factors will remain the dominant area of focus.

What are the consequences of the changes?

We recently toured a modern medical supply facility. This national supplier has several processing centers across the continent. As each new plant is built, the level of automation is greater than at the older facilities.

At this newest plant, all production rates are determined by the speed of the automated equipment. Human labor still represents 60 percent of the company’s expenses, but these workers generally provide a specific complex task within the continuous process, a task that is not yet automated. A higher skilled worker will not impact output since the rate is controlled by the speed of the automated processes.

If a worker has very low productivity, he or she will not be able to keep up with the machines. This simply results in management replacing one worker with another who can keep up. During interviews, management reported that once the plant is fully commissioned and tuned, they see no material change in performance over time. The design of the automated facility up front established the operation going forward.

Using this facility as an example, it can be seen how many of the traditional managerial concerns are of little consequence. Continuous improvement, worker motivation, learning curves, performance appraisals and team building are of little interest to the executives here. Employee turnover at the company runs at around 30 percent per year (in line with the results of our LinkedIn sampling). Although people in management stated that they would like lower turnover, it was not important enough to dedicate any significant resources to retain workers. Management was not concerned about losing any key employees who might have some unrecognized tacit knowledge that would impact production if they left.

A new frontier

The motivation for this article has been the realization that times may be changing – this time for real. We may need to rethink our traditional response of pooh-poohing the promise of increased effectiveness through software applications. The initial response that procedures manuals and operations protocols are not worth bothering with may also be wrong considering the workforce largely consists of people unfamiliar with an organization’s normal practices. Rejecting new management program rollouts because “They are only another flavor of the month and will be replaced soon with a new flavor” may be a stance that fails to recognize that real change is coming.M

Key strategies for success that worked in the past may need to be replaced. An example from project management is the insistence of the right to hand pick your project team. When you are new and many of the potential team members have been in the organization a short time, what value does hand picking people you are unfamiliar with add? If you don’t have – and never will have – experienced workers, then believing that experienced workers will find the workarounds to offset inefficiencies built into processes may be shortsighted.

The focus on retaining key high performers and incremental improvements may become obsolete.

However, as one hopeful vision, perhaps the new organization will become filled with people who continually respond to automated systems and thus lose the ability to question ineffective processes. Perhaps a need for a new breed of industrial management consultant will arise. Following Thomas Kuhn’s observation that it takes an outsider to recognize inconsistences – such as Albert Einstein being a patent clerk and Antoine Lavoisier (father of modern chemistry) being a tax collector – future management consultants may be the people who can see the impact of the automated processes because they are not involved at a day-to-day level.

Going forward, industrial management requires a new set of tools to address the issues without historical precedent. We will soon find that things really are different this time.

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